Construction Case Study - Large Number of Open Claims

A 120-person construction company entered into a deductible program with their carrier in 2001 and ended it seven years later. In 2008, the open claims were not moving along and several large reserves were escalating. The carrier was retaining in excess of 1 million dollars of collateral. Soon after, Assurance was hired to resolve the issue at hand.

What are the takeaways?

The importance of proper claims handling and carrier relationships should never be overlooked. See how we approached the situation and jot down some of the takeaways in case you fall into a similar one.

1. Take baby steps; close the smaller claims first – Work with your insurance broker to identify open claims that can be quickly resolved through proper review and communication to the carrier. By getting the small claims resolved, you’re building a better case and making the losses look better.

EXAMPLE: Through the work of Assurance’s claims team and the client, several of the smaller claims were closed and a plan was established for the larger cases.

2. Develop a game plan for large claims – It helps to work with brokers who have good carrier relationships that can be leveraged to your best advantage. Beyond the relationship, it’s also important to dive into the large losses, build a case, and meet multiple times with your carrier and broker providing precise details. Persistence pays.

EXAMPLE: Assurance’s property & casualty and claims team met to formulate a long-term plan on the large open claims. Multiple meetings were set-up between Assurance, the client and carrier in order to stay on track.

3. Conduct a collateral review – The process of negotiating collateral encompasses three distinct steps: modeling, financial review, and goal setting/tactical discussion and direction. Work with your insurance broker to look at historical, current and pro forma financial statements, as well as the perspective on current trends, liquidity, debt, coverage ratios…etc.

EXAMPLE: Assurance met with the carrier and provided them with a collateral review. Soon after that meeting, over $300,000 was returned to the client. About one month later, the carrier closed the entire program with a final return of over $100,000 to Gateway.

What was the result?

$400,000 in collateral returned.

EXAMPLE: The client had struggled for years to get the carrier to even provide an update on the collateral. Through consistent efforts by their broker, the carrier resurrected the program and devoted resources to bring the plan to resolution.

Need additional resources?

Michael Alberico is a Senior Vice President and Construction Practice Leader at Assurance, as well as the Practice Leader of Assurance’s Alternative Risk program. With over 35 years of experience, Michael’s primary responsibility is to provide comprehensive and integrated risk management programs that fully address risk needs while maintaining price sensitivity. Michael graduated from the University of Illinois at Champaign-Urbana with a Bachelor of Arts degree in History.

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